SEI recently initiated two trades within a global reflation theme—adding exposures to emerging markets (EM) equity and commodities—that are expected to benefit from a relatively strong global economy. We believe that global growth will remain robust in 2026, as earnings remain strong and financial conditions remain easy; therefore, we maintain a positive outlook on risk assets for the remainder of the year. While the military conflict in the Middle East, artificial intelligence (AI) disruption, and private credit concerns have all contributed to current heightened volatility, we see opportunities in both broad-index commodities and EM equities.

Rationale adding broad commodities exposure:

Strong economic growth and geopolitical volatility should be a positive combination for the broad commodity complex. We see several structural tailwinds for the asset class outside of the near-term supply issues, including the ongoing realignment of global trade and renewed investor interest in today’s heightened inflationary environment. More specifically, we believe industrial metal prices will benefit from both current and future demand driven by AI generally, the associated data center expansion, and the broader digital infrastructure buildout. This global trend is also likely to benefit the energy complex in the intermediate term and beyond the current conflict in the Middle East. Additionally, precious metals have benefited from heightened investor interest, which should remain a source of demand in the intermediate term.

Rationale adding EM exposure with CNH hedge:

We believe EM equities offer compelling valuations, with forward price-to-earnings multiples and price-to-book valuations approximately 40% lower than those of developed-market equities. The growth outlook is also meaningfully stronger on a relative basis with the International Monetary Fund (IMF) projecting emerging economies to grow at an average annual rate of 4%, compared with approximately 1.6% for developed markets. Finally, from a monetary policy perspective, many EM central banks are further along in their easing cycles than their developed-market counterparts, which should provide additional support to economic growth.

Additionally, we have implemented a hedge to mitigate potential tail risks associated with our EM exposure. Specifically, we identified a cost-effective opportunity in the currency markets by purchasing protection against a decline in the Chinese yuan (CNH). Pricing for this hedge is currently attractive and is intended to provide downside protection in the event of a significant disruption in EM, particularly given that China represents over 25% of the total market capitalization of the MSCI Emerging Markets Index.

Important information

Investing involves risk, including possible loss of principal. Diversification may not protect against market risk. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice and is intended for educational purposes only. The information contained herein is for general and educational information purposes only and is not intended to constitute legal, tax, accounting, securities, research or investment advice regarding the strategies or any security in particular, nor an opinion regarding the appropriateness of any investment. This information should not be construed as a recommendation to purchase or sell a security, derivative or futures contract.

Information in the U.S. is provided by SEI Investments Management Corporation (SIMC), a wholly owned subsidiary of SEI Investments Company (SEI).

Certain economic and market information contained herein has been obtained from published sources prepared by other parties, which in certain cases have not been updated through the date hereof. While such sources are believed to be reliable, neither SEI nor its subsidiaries assumes any responsibility for the accuracy or completeness of such information and such information has not been independently verified by SEI.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice and is intended for educational purposes only. There are risks involved with investing, including possible loss of principal. Diversification may not protect against market risk.

The information contained herein is for general and educational information purposes only and is not intended to constitute legal, tax, accounting, securities, research or investment advice regarding the strategies or any security in particular, nor an opinion regarding the appropriateness of any investment. This information should not be construed as a recommendation to purchase or sell a security, derivative or futures contract.

The SEI Global Assets Fund Plc, SEI Global Investments Fund Plc, and SEI Global Master Fund Plc (the “SEI UCITS Funds”) are structured as open-ended collective investment schemes and are authorised in Ireland by the Central Bank as a UCITS pursuant to the UCITS Regulations. The SEI UCITS Funds are managed by SEI Investments, Global Ltd (“SIGL”). SIGL has appointed SEI Investments (Europe) Ltd (“SIEL”) to provide general distribution services in relation to the SEI UCITS Funds either directly or through the appointment of other sub-distributors. The SEI UCITS Funds may not be marketed to the general public except in jurisdictions where the funds have been registered by the relevant regulator. The matrix of the SEI UCITS fund registrations can be found here seic.com/GlobalFundRegistrations.

No offer of any security is made hereby. Recipients of this information who intend to apply for shares in any SEI UCITS Fund are reminded that any such application may be made solely on the basis of the information contained in the Prospectus. Please refer to our latest Prospectus (which includes information in relation to the use of derivatives and the risks associated with the use of derivative instruments), Key Investor Information Document, Summary of UCITS Shareholder rights (which includes a summary of the rights that shareholders of our funds have) and the latest Annual or Semi-Annual Reports for more information on our funds, which can be located at Fund Documents (https://seic.com/en-gb/fund-documents).

Information issued in the UK by SEI Investments (Europe) Ltd, 1st Floor, Alphabeta, 14-18 Finsbury Square, London EC2A 1BR which is authorised and regulated by the Financial Conduct Authority. Investments in SEI Funds are generally medium- to long-term investments.

This information is made available in Latin America FOR PROFESSIONAL (non-retail) USE ONLY by SIEL.

Any questions you may have in relation to its contents should solely be directed to your Distributor. If you do not know who your Distributor is, then you cannot rely on any part of this document in any respect whatsoever.

Issued in South Africa by SEI Investments (South Africa) (Pty) Limited FSP No. 13186 which is a financial services provider authorised and regulated by the Financial Sector Conduct Authority (FSCA). Registered office: 3 Melrose Boulevard, 1st Floor, Melrose Arch 2196, Johannesburg, South Africa.